Owning their own home is one of the big dreams that every family has at one time or another. A home is a basic need that fulfills one of our most primal desires, which is to feel safe in our surroundings.
If you think about it, in very few places do you feel as relaxed and comfortable with yourself and the surroundings than you do when you are at home. Millions of individuals choose to rent their home rather than to buy, but for some, it isn’t a choice to rent, but rather a necessity because of the inability to obtain a home loan.
There are several government home loan programs, one of which is the Federal Housing Authority loan, also known as the FHA loan. In 1934, the Federal Housing Authority was created to help individuals who could not afford to purchase their own home because of the large down payments and high interest rates involved.
The FHA loan was created to assist individuals in purchasing a home by requiring a smaller portion to be paid as a down payment, and also add a reduced interest rate to the package.
Most FHA home loans only require the homeowner to pay an average of 3% of the home’s original purchase price as a down payment. This is a substantial reduction in considering that most lenders will require a minimum of 20% down when securing a home loan.
Most people are not aware of the fact FHA does not in fact make home loans. Instead, it insures the loans made by FHA qualified private lenders. In order to get an FHA home loan, you must meet certain financial criteria, as it was conceived to help low to moderate income families finance a home of their own, without having to worry about the large down payments many of them simply cannot afford.
Even though lenders traditionally try to give good rates on FHA loans, it is always a good idea to do your due diligence and shop around for the best FHA home loan packages. Once you have found a lender with a package you are happy with, it is time to begin the process of buyer risk assessment.
The lender will want to know everyone and everything you currently owe, so they can do a proper debt to income ratio assessment. This allows the lender to know whether you qualify for a loan, and also lets them know what kind of payment you can afford.
Credit worthiness is also surveyed by checking into your credit history to see if you have any unpaid bills, or if you are late on any payments. Many people make the switch from renter to homeowner and never pay a penny more than they did while renting.
If you are currently in the market for a home, you should really consider applying for an FHA loan. You may walk away with a smaller mortgage payment than you ever thought possible, and a nice new home to boot!
For more information on buying a new home visit Property Expert
